Labtests project 'a unique experiment'

An ‘amazed’ consultant says the Labtests changeover is unique. Photo / Glenn Jeffrey

The pathology world is watching Auckland's switch to a new blood-testing company, according to a Canadian observer.

She described the transfer of responsibility for the region's 30,000 tests a day as a unique experiment on a huge scale.

The changeover from Diagnostic Medlab (DML) to Labtests Auckland, part of the multinational company Healthscope, is just six months away - due to start on September 6 and 7.

Talks are under way, led by the region's three district health boards, to smooth the transition.

Kristine Bailey, a Canadian laboratory management and start-up expert, yesterday restated concerns over the change, which DML successfully challenged in the High Court but lost in the Court of Appeal.

Ms Bailey, president of laboratory consulting firm AiCon, said she was "phenomenally amazed" Auckland's three health boards had proceeded with replacing a high-quality provider with a newcomer.

In evidence prepared for DML's High Court case, she wrote: "I have never heard of any new large laboratory being started up from scratch inside a year, let alone one that would be required to handle the volume of testing that DML currently processes, 30,000 to 35,000 tests per day.

"The decision made by the [Auckland region] DHBs is utterly unique. I am not aware that any such project has ever been attempted elsewhere in the world. The effect of this decision is to run an experiment on a very large scale with the population of Auckland. The world's pathology community is watching it closely."

Ms Bailey said yesterday that the physical switch could probably be done within a year, but matters such as establishing relationships with the public and GPs, training staff in new systems and ironing out problems would push the time well beyond that if the expected level of service was to be maintained.

Labtests, however, said Ms Bailey's comments were scaremongering and part of ongoing attempts to undermine public confidence in the tendering process and the company's ability to provide the laboratory service.

Labtests chief executive Ulf Lindskog said the Court of Appeal had found that both DML and Labtests were able to meet the specifications of the health boards, whose quality requirements were unchanged from the old contract to the new.

Ms Bailey's evidence had been "dealt with comprehensively in the High Court" by written evidence from Labtests team members who were "on the ground" in the Auckland market.

The court had found that the DHBs did not act unreasonably in awarding the contract to Labtests.

"DML's transition risk argument was rejected by the High Court," Mr Lindskog said.

The health boards' spokesman, Geraint Martin, chief executive of the Counties Manukau board, noted Ms Bailey's alignment with DML and said of her comments: "They would say that, wouldn't they?"

He agreed the transition carried risks and there might be hiccups, but Labtests and the DHBs' advisers were confident the new company could provide a service that was "reliable, accurate, safe, quality and accessible.

"That's what they signed up to do in their side of the contract."

* The changeover

Labtests Auckland won the contract to provide Auckland's community laboratory services from July 1, 2007.

Incumbent provider Diagnostic Medlab (DML) won a High Court case, in which the contract was overturned.

The Court of Appeal reinstated the contract and the Supreme Court refused to allow DML to appeal.

Auckland's three district health boards, which issued the contract, last week gave notice to DML that its contract will end on September 6.

Labtests, currently setting up in Mt Wellington, will provide community lab testing from September 7.

DML is paid $72 million a year.

The boards say the Labtests contract will save them $6 million a year because the new company will make less profit.

The number of collection centres for blood tests and other samples will shrink to 53, from 80, but the number of collection staff will be similar to now.

The locations of collection centres are undecided.

DML processes more than 30,000 tests a day, from around 10,000 patients.